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How much would you pay for a diamond necklace?

How much would you pay for a high-quality Italian meal?

How much would you pay to use AIM?

What if your answers to these questions actually became the prices for these items? Would you be willing to pay them then? Would you be more willing to buy the product if you chose the price? Do you think it would make a difference if the price, without you choosing, was set at the price that you would pay for it if given the choice?

A new fad is emerging in the world of consumerism, it seems. Not only are companies making use of consumers' ideas and creativity on the Internet and social media sphere, but they're also letting the consumer, in some cases, even dictate the prices of their products.

It's an interesting phenomenon, and one that raises a lot of questions- about both what that means for advertising and what that means for consumers psychologically. In my second blog post ever, I mentioned a book called Predictably Irrational by Dan Ariely. The book details the "hidden forces that shape our decisions": why we buy certain products over other ones, the ways in which we make these economic decisions, and what our pattern of decision making means for us as consumers and as psychologically functioning human beings. He discusses a series of scientific experiments that he has conducted with partners in each chapter, and shows how humans really are irrational in their decision-making processes. It's a fantastic book, and one definitely worth reading for its insight and enlightenment.

As it turns out, the subject of consumers being more willing to pay for a product when they have determined the price for it is actually true, according to Mr. Ariely's book. Not only are consumers more willing to buy it (due to the fact that they believe they're getting a "better deal"), but they're also more satisfied with the product because they've justified the price to themselves. This phenomenon of adjusting attitidue to behavior is called cognitive dissonance, and it's a major part of the reason why we tend to convince ourselves that doing things that we may not have necessarily condoned in the past become ok once we've done them.

Since these consumers have convinced themselves that what they're buying is really worth the price, because they've set the price, they're more willing to pay it and more willing to enjoy it. We tend to overlook the flaws in something when we've already justified it to ourselves, and this effect is seen in things as simple as buying a Gator football ticket for $100 dollars after waiting in line for 6 hours. No matter how boring the resulting game is, it was worth it because of what you went through to get the ticket. You're more willing to enjoy the game, more alert in paying attention to it. In short, the fact that you've had to go through a conscious decision-making process when it comes to the product (do I want to wait in this line? What will I be giving up by investing my time and money into this ticket? What do I gain by going to see this game? Is it really worth it for me?) makes you more open-minded with facing it.

This is what companies are starting to realize in the growing world of consumerism which we seem to be entering. AIM is beginning to offer specialized packages to consumers for prices that they pay themselves. A local Italian restaurant in Gainesville lets you order, cooks your food, and then accepts whatever price you think will cover the cost and the quality of the food that you've just eaten. Surprisingly, people (even poor college students) will tend to pay more for the food, not only because the waiter is staring them in the face while they determine the price, but also because they really have become more satisfied with the food than at other restaurants where the price is already set.

It's an extremely interesting phenomenon, and one that marketers may want to make use of in the future due to its seemingly lucrative tendencies.

However, as with anything in life, this should be used if and only if a company can afford to use it, and if it does not have an effect on their reputation (for example, an already-established premium brand such as Apple probably would not be able to use this method because the prices they have set, though higher than other products of the same quality, have already proven themselves to be willingly paid by the people who buy them). Instead, this method seems to work with businesses who are just getting off the ground or companies who need to resort to a new method to bring in profit. In this way, the fad will probably spread to other new-starting businesses, and hence might even become the future of consumerism.

Will this trend become the future of consumerism, and will it have an effect on the way we view products and the satisfaction we get out of them?
You decide.